Which of the following bonds will be most sensitive to a change in interest rates if all bonds have the same initial yield to maturity?
A) a 20-year bond with a $1 000 face value whose coupon rate is 7.4% APR paid semi-annually
B) a 20-year bond with a $1 000 face value whose coupon rate is 5.8% APR paid semi-annually
C) a 10-year bond with a $1 000 face value whose coupon rate is 5.8% APR paid semi-annually
D) a 10-year bond with a $1 000 face value whose coupon rate is 7.4% APR paid semi-annually
Correct Answer:
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